Eurozone crisis: Debt fears loom at White House summit

Barack Obama: ''We've got a stake in their (Europe's) success and will continue work in a constructive way to to try to resolve this issue''

US President Barack Obama has hosted European Union leaders in a wide-ranging summit overshadowed by the EU debt crisis.

He met Herman Van Rompuy and Jose Manuel Barroso at the White House in a discussion that covered US-EU trade ties, foreign aid and cybersecurity.

Mr Obama said the US was "ready to do our part" to resolve the debt crisis.

The White House summit, the first with EU leaders since Mr Van Rompuy took office, came amid new recession fears.

Mr Obama said after the summit that the US has "a stake" in the EU's success.

"If Europe is contracting, or if Europe is having difficulties, then it's much more difficult for us to create good jobs here at home," he said.

'Our way'

In a statement, the leaders acknowledged the economic difficulties facing both the US and the EU.

"We are committed to working together to reinvigorate economic growth, create jobs, and ensure financial stability," the statement said.

The meeting also covered topics which the EU-US largely agree on - including worries about Iran's nuclear programme, efforts to increase clean energy technology and avoid climate change, as well as supporting democracy after the Arab Spring.

Mr Van Rompuy said the world was experiencing an upheaval not seen since the end of the Cold War.

Yet he said he remained optimistic despite current concerns.

"In the last two decades, I am happy to say the world is going our way - towards market economies and democracy," he said.

Outspoken Geithner

In its new forecast, released on Monday, the Organisation for Economic Co-operation and Development (OECD) says the eurozone economy is contracting and argues the European Central Bank must take action.

Start Quote

Europe has the resources and capacity to deal with it and they need to act decisively and conclusively to resolve this problem”

End Quote Jay Carney White House press secretary

The eurozone and UK could be entering a recession, the OECD warned.

But world markets were up on Monday in response to reports of a proposed fiscal union that would set binding limits on eurozone government borrowing.

Correspondents say Mr Obama's ability to avoid contagion from the eurozone and to bring down US unemployment is critical for his re-election campaign in 2012.

The president has not been publicly outspoken on what European leaders should do about the mounting crisis, limiting his remarks to the idea that the crisis requires "some tough decisions".

While the summit was under way on Monday, White House spokesman Jay Carney said the president was confident Europe had the capability to deal with the situation.

"Europe has the resources and capacity to deal with it and they need to act decisively and conclusively to resolve this problem," he said.

US Treasury Secretary Timothy Geithner has often warned of the dangers of failing to take action, urging Europe to find political will and create a "firewall" against a spreading crisis.

But contagion fears have been exacerbated by recent developments, including the cost of Italy's borrowing jumping to 8% last Friday, and a disappointing German bond sale on 23 November.

The governments of Italy and Greece have seen political shifts due to the crisis, with prime ministers in both countries replaced and "technocratic" governments installed.

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